What Is Negotiation Theory?

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  • Written By: Melissa Barrett
  • Edited By: PJP Schroeder
  • Last Modified Date: 08 November 2019
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Negotiation theory is a field of psychological study that looks at decision-making processes within group settings. Several areas of human interactions are studied within this discipline, and many of the resulting theories have applications in the corporate environment. In business situations where groups of individuals commonly must make mutual decisions, knowledge of these theories and their implications can ease tensions considerably.

Certain conditions must be met before the tenets of negotiation theory can be applied. First, it is presumed that all parties involved in negotiations are rational and of average intelligence. It is also presumed that these parties actually wish eventually to reach an agreement and will actively work toward that end. Finally, it is generally presumed that each individual is working to achieve the best possible outcome for his or her own interests.

Many who study negotiation theory have come to see decision making in a group environment as a strategic competition. This viewpoint sees each negotiator as an opponent and is referred to as game theory. One of the driving tenants of game theory is that opponents must seek to minimize their potential for loss while maximizing their potential for benefit. As each person involved is operating with the same mind-set, the interactions can get quite intricate.


Knowledge of integrative analysis practices can ease negotiations by changing their structure. This study of negotiation theory investigates the effects of contact among the negotiators at various points of the talks. It further seeks to break the process down into smaller, more easily managed stages. By discovering potential periods of tension in the decision-making process, changes can be made to avoid problems in future talks.

Negotiation analysis theories examine situations where the negotiators are influenced by factors other than self-interest. Often, third parties are brought into these types of negotiations to counteract the effect of those outside influences. This branch of negotiation theory focuses on joint gains rather than individual gains. In short, it strives to minimize the potential losses and maximize the potential gains of all parties.

The fact is that, even when all the establishing criteria appear to be met, a successful conclusion to negotiations may not be possible. This occurs most often when one negotiator is acting in bad faith. Bad faith in negotiations can be unconscious, but more often, it is caused by a fundamentally unreasonable party wishing to appear cooperative. These individuals usually have emotional involvements that preclude compromise.


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Post 3

Does negotiation theory say anything about the psychology of negotiating parties?

For example, are there any steps or stages in the negotiation process that help resolve psychological fears, anger and anxiety felt by the parties?

I had heard once that there was a negotiation meeting set up for two groups. They were longstanding rivals and had a lot of pain and anger associated with each other. The negotiators first spent several meetings having the two sides talk about their feelings, about how the other party has hurt them. Only after going through these discussions and emotions were the two groups ready to talk about reaching an agreement.

Is this the norm in negotiation theory?

Post 2

Great information. I'm also glad you included the stages of negotiation in this article. Some people think that negotiations are meant to happen relatively quickly. The Dayton peace negotiations is often shown as an example, because an agreement was signed in less than a month.

But if the grievances of parties go back a long time and are really deeply rooted, it is not reasonable to expect a quick negotiation. I would include all regional, ethnic and religious conflicts in this category.

Negotiations for these conflicts should have stages and plenty of time.

Post 1

I'm a conflict resolution student. I know from my classes alone about so many examples of bad faith negotiations. I think this happens the most when the conflict is not ripe yet. This is a term we use in the field to talk about a conflict where the parties are ready for its resolution.

If they are not ready, they may still participate in negotiations, especially if there is pressure from a third party. But the problem is that they are not really interested in resolving it; they are not ready for it yet.

Even then, I think it's still beneficial to hold negotiations. It may help the parties realize their goals more clearly and make more reasonable requests from the other party.

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